Want a contract? Flash your green credentials on your way in, please
Mining magnate Brian Gilbertson once recalled a results day at the turn of the Millennium. Ready to take City analysts through impressive figures on iron ore production he was somewhat surprised when asked: “What’s your internet strategy?”
The South African spent the rest of the morning hurriedly writing down a dot com plan on an envelope as he went from broker to broker in the back of a cab.
Company execs have had a bit longer to pen their plans for saving the environment. Few could be excused for not being prepared for Cop26, not least because the event was postponed for a year.
Up in Glasgow, US Presidential envoy John Kerry applauded industry for joining the party; steel producers and the like could be the silver bullet when it comes to tackling climate change, he said.
Speaking at Cop26 one afternoon Kerry extolled the virtues of green steel, green cement and lauded companies such as Volvo and Maersk for committing to using more sustainable materials.
“It gives suppliers certainty,” he said. “Someone innovating knows they have a market.”
There has always been a fear in boardrooms that doing the right thing could cost money.
But what’s of growing interest to observers is a subtle shift taking place at a local level which means that very soon, doing the right thing could be the only way for companies to make money.
An increasing number of councils are being far more prescriptive when it comes to the type of private sector firms they award work to.
Instead of simply accepting the lowest bid they’re now adding criteria such as whether wannabe suppliers pay the Living Wage, will appoint apprentices in the local town or, critically, what environmental credentials they have.
The story starts in the city of Preston.
Over a decade ago, councillors decided they’d quite like the money they spend with the private sector to stay in the region. The aim was to turn around a city where one in three schoolchildren lived in poverty and life expectancy was as low as 66.
A think tank – the Centre for Local Economic Strategies (CLES) – worked with Preston to identify large institutions such as the county council, the university and hospital and work out ways to give more of a £1bn procurement pot to local businesses.
A £1.6m council food budget for instance was broken up and awarded to farmers in the region.
Preston claims the programme means 4,000 more people are on the real living wage, the city has moved up the deprivation index and it’s become the most improved place to live in the UK.
Other councils have looked at the city and adopted the model themselves, but with a twist.
A number want companies to commit to hiring locally. But critically, “social values” are now becoming part of the tender process.
Some 13 councils are asking that any business they spend money with pays a fair rate of tax.
And Manchester City Council last year became the first local authority to trial the inclusion of a 10 per cent environmental weighting in its procurement process.
It began with £22m worth of highways contracts and the council claims this stipulation alone meant successful bidders set carbon reductions for their business.
Those bidding for a housing contract with the City Council this year had to pledge not to use diesel vehicles – and to recycle 90 per cent of waste.
To many in Westminster the idea of community programmes will have a whiff of Corbynism about it. But while those councils leading the charge are Labour-run, many are in Northern Red Wall areas now critical to Tory success.
And senior Conservatives are taking note.
Last year, Cabinet Office Minister Lord Agnew cited the freedoms offered by Brexit when he vowed to rip up the Government’s procurement process and award more of the £292bn of private sector contracts to small and medium-sized firms.
Colleagues are now keen for him to use this freedom from EU red-tape to push the green agenda.
One insider said: “It’s early days but you can see where this is going.”
Soon it really could pay to go green.